Analysis: Howard University Heading in Harm’s Way?

When Howard University began putting the final details on enrollment for the 2012-13 school year this time a year ago, it had no idea it would soon face a last-minute flood of students unable to enroll due to a tightening of requirements in a federal loan program for parents seeking to help pay their children’s tuition. More middle income and poor households had been hit hard by the nation’s economic downturn since 2007 with family incomes falling fast and living costs continuing to rise, Howard and many of its peer institutions learned. With college educations, many financed with the federal loan called Parent Plus Loan (PPL) suddenly unaffordable, Howard and its peers saw fall enrollment drop by the thousands nationwide. The institutions’ anticipated income fell accordingly.

For Howard, the PPL decision by the United States Department of Education costs the university hundreds of students and roughly $8 million in anticipated income for the 2012-2013 school year. The PPL decision jolted the university just as it was resettling from a rough launch two years ago of a plan for downsizing and refocusing the university for the future. Those various aspects — hiring, student financial aid and “controllable operations” — of what the university called its “renewal” plan ran over budget by more than $30 million.

Today, as Howard readies for another school year, a more threatening cluster of storm clouds appear to be gathering over the prestigious institution, founded in the post-Civil War era with a guaranteed annual allocation (about 25 percent of its annual budget) from the federal government and since considered invincible. The PPL crisis, which is directly impacting income, retention and graduation rates for schools, is worsening for Howard. Early financial aid results show the PPL loan rejection rate for parents of Howard student applicants so far is 10 percent higher for 2013-14 school year applicants than was the case this time a year ago. In addition to the PPL situation, Howard, which has been allocated more than $200 million a year in the past decade, is beginning to feel the bite of the new, congressionally mandated, 5 percent, across-the-board federal budget cut. The university will see its guaranteed federal funding cut by $2 million for the current fiscal year. The guaranteed federal funding allocation cut soars to $25 million for fiscal year 2014, based on the five percent “sequestration” budget cutting law. That doesn’t count the revenue Howard risks losing when various federal grant-making agencies reduce their budgets and grants for the federal fiscal year beginning October 1. Howard is a major benefactor of grants from the Department of Health and Human Services and National Institutes of Health.

Meanwhile, Howard continues to wrestle with operating losses at its historic hospital. The hospital, never touted as a break-even or surplus-generating public service entity, has seen its revenue shrink as federal rates decline for reimbursement for indigent care, and fewer of its patients are able to pay the full costs of health care. Unlike most of its peer institutions in the Washington area, Howard has refused to spin its hospital off into a separate entity, a long-held, well-intentioned stance that was more manageable when times were more flush. Howard officials refused to discuss the cost of the hospital for this story, noting it is part of the university and the university has finished each of the last three years with a balanced budget. Howard, which has produced the largest number of African-American Ph.D.s, lawyers and dentists of any institution in the nation, has faced challenges and grilling in the past. That has helped protect its special status in past decades. Nothing is “sacred” in today’s volatile national political arena and uncertain economy, say officials at peer institutions and Black college supporters in the federal ranks of government. That includes Howard, they reluctantly acknowledge. “It’s the perfect storm,” said Johnny Taylor, president and chief executive officer of the influential Thurgood Marshall Fund, characterizing the forces converging on Howard.

Looking at the impact of the federal actions on Howard and its smaller peers, Taylor said, “It’s the beginning of the demise of the weaker (smaller institutions with small endowments) institutions and, for the larger ones, it means they are going to have to start really making choices about the kind of education they can provide.” Taylor, whose Washington-based non-partisan group has raised financial aid for minority students at HBCUs for several decades, said despite having nearly half a billion dollars in its endowment, Howard cannot take funding hits like these year after year without being significantly hurt over the long term. “None of our institutions can survive a decade of continuing cuts like the ones we are having now,” Taylor said. “It’s really as bleak as it looks,” he said of the challenges facing Howard and its smaller peers.

Some members of Howard’s board have gone public with their concerns, including university Vice Chairwoman Renee Higginbotham-Brooks, a Texas lawyer who is a Howard alum. Early this spring, according to The Washington Post, she warned in a letter that the university “will not be here in three years if we don’t make some crucial decisions now.” Her opinion was challenged by Howard Board Chairman Addison Barry Rand, chief executive of AARP. According to the Post, Rand said his colleague had advanced “an unduly alarming picture of the university.”

Noticeably absent from the public debate about Howard’s status and future is university President Sidney A. Ribeau. Aside from his detailed state of the university reports, Dr. Ribeau, now in his fifth year as chief executive at Howard, has remained publicly silent on the on the emerging issues. “The PPL did hurt,” said Dr. William E. Hudson Jr., Florida A&M University dean of student affairs. FAMU lost 500 students and millions of dollars last fall as a result of the last-minute PPL loan denial decisions. “We understand the impact,” he said, noting that based on FAMU’s experience last year, his colleagues turned to alumni and other supporters at the last minute for financial help to keep the students in school. Howard probably was compelled to do the same, he noted, adding he was not intimately familiar with its situation. Howard was able to help about 600 of its students from PPL rejected households stay in school this past school year, said university spokeswoman Kerry Ann Hamilton. Noting that the rejection rate of PPL loan applications “is worse” for the coming school year than this time a year ago, she said the university “anticipates assisting our students with appeals of those denial decisions, as well as providing support for internal and external funding opportunities.”

Last year, Howard raised $1.3 million from supporters (including alumni) for its “Bridging the Gap” campaign, a special financial aid fund for students in need. The campaign has a $25 million goal. Despite the new PPL rule’s potential for another round of widespread impact this fall on Howard and other HBCUs, the response from Washington is mixed. The issue was not mentioned earlier this month at a meeting of the White House Initiative on Historically Black Colleges and Universities. The Department of Education, meanwhile, said last week it has held four public meetings this year on the new PPL rule “and is soliciting comment from the field around PLUS loans as a potential issue for negotiated rulemaking in 2013. We are continuing to gather information, and no decisions have been made at this time,” the statement said. The federal agency said people are still being allowed to appeal a loan denial decision and that it has identified and contacted PLUS loan applicants “most likely to benefit from the reconsideration process.” Meanwhile, Howard has been working Congress to see if there is any wiggle room in the 5 percent budget cut for the balance of this fiscal year or 2014. It reportedly asked lawmakers for a special exception, given the university’s special status in the federal budget. No luck. More recently, it has reportedly been talking with lawmakers to see if the 5 percent cut could be lowered to a smaller percentage. Howard’s ability to make its case, as it has had to do on occasion in the past, has become tougher today, said one veteran Capitol Hill advocate for Black colleges, as it has lost most of the infrastructure that historically supported or vouched for it as more and more lawmakers emerge to the fore who are not steeped in, nor especially interested in, the university’s history. Those lawmakers are loyal to other institutions now or just want to know why Howard is getting so much money. “Howard is a serious situation because of all the implications for other HBCUs,” said the Capitol Hill advocate, who would not speak for attribution. He notes Howard and its peer schools have petitioned Congress for relief, “but what are the expectations for a response in these times?” University spokeswoman Hamilton said the university has not sought any special treatment. “Howard has joined with a consortia of other universities in making the case for the negative impact of sequestration on the research agenda of the country,” Hamilton said. “We have not sought special treatment, but have highlighted the unfortunate impact that this policy is having on the university,” she said. Hamilton said the university, which has more than 3,000 non–academic employees and more than 1,000 faculty, expects enrollment — about 10,002 students last fall — to stay flat this coming school year.